Electric vehicles brace for trial by fire as firms remain optimistic

The reality behind all the noise about people switching to electric two-wheelers is that they amounted to just over 3 per cent of the 6.69 million ICE and electric two-wheelers registered in the first six months of this year.

The numbers from VAHAN are based on the electric scooter registration of eight companies (excluding the incumbent players, Bajaj and TVS) which make for the bulk of electric sales.

Between January-June, the eight players registered collectively a total of 212,000 electric scooters. True, in March their share did go up to 3.7 per cent of overall two-wheelers but it fell to 2.8 per cent in May. In June, the figure is at over 3 per cent. The sales of electric motorbikes are too insignificant to consider.  

But none of this has diminished the ambition of the stakeholders.  Ola Electric founder Bhavish Aggarwal says that by 2025 all two wheelers will shift to electric.

His rivals  expect the industry to hit  750,000 electric two scooters by the end of the calendar year. To do so, it has to gear up and register around 90,000 vehicles on an average every month for the next six months, that is 2.3 times more than what it managed in June — a pretty herculean task, if not impossible, task.

With around 6-8 million scooters on average sold in the country, this would have given the electric scooter players at  least a 10 per cent share of the overall market for 2022 (both ICE and electric) and the much needed inflexion point for quicker growth.

But that looks a long way off unless the situation changes dramatically during the rest of the year.    
 

Tarun Mehta, co-founder of Ather Energy, says that the industry will hit a run rate of 100,000 electric scooters by December if the chip crisis does not worsen.

And Aggarwal says that Ola’s own run rate by the end of December should touch $1 billion from around Rs 500 crore in April-May.

Then there is the government which is sticking to its guns by insisting that 80 per cent of two wheelers will be electric by 2030.

What has been missed amid the bandying around of all these numbers is that 70 per cent of the 18-20 million two wheeler market is motorbikes and there is hardly any product in the market for them.

Apart from announcements by Ola Electric, TVS and  Bajaj Auto, there is no electric bike (Pune-based Torque has just launched one) with adequate numbers to show for. Making electric motorbikes is  more  complex, requires more power and might still be some way down the line. Without a substantial shift in motorbikes to electric, there is hardly any question of  an 80 per cent shift in two wheelers even beyond 2030.

Nomura, which tracks the electric sector segment carefully, has more realistic estimates, namely, that about 30 per cent of  two wheeler vehicles will be electric by 2030.

“One might bear in mind that the automatic transmission scooter is not the leading contributor in the Indian two wheeler market, rather it is entry level mobikes which drive growth in India,” said Harshvardhan Sharma, Nomura’s head of auto retail consulting practice.

He added: “There are a very few mass market electric mobikes currently. Also the bulk of the two wheeler electric segment will be fuelled by B2B growth in the wake of hyperlocals and e-commerce growth. And there will be consolidation.”  

On the slowing down in numbers, Sharma believes the incidents of battery malfunction have led customers to question safety.

“They are postponing their decision to buy electric scooters and are remigrating to the ICE segment as well. One might see a stack shift owing to the higher uptake of entry level second-hand cars. And there is also the chip shortage.”